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STRS Ohio members who are preparing for retirement should be aware of items that can affect their pension benefit payment, such as, taxes and reemployment provisions. In addition to obtaining information on the STRS Ohio website, members can also obtain information at an individual counseling session or seminar.

Includes:

Supplemental Savings

Overview

Even though STRS Ohio may provide a substantial amount of your retirement income, retirement savings accounts offer a way to supplement your savings. Tax-deferred accounts, such as a 403(b), a 457(b) governmental plan or a 401(k) enable you to avoid current taxation on your contributions and put the full pretax amount to work for you before it is reduced by taxes. Tax regulations favor those who want to save for retirement. STRS Ohio recommends that you consult a tax or investment professional when evaluating retirement savings accounts and the appropriate choice(s) for you. See below for an overview of account features. For further information about the importance of supplemental savings, click here.

Generally begins April 1 of the year following the year in which you reach age 70-1/2

None

*Adjusted gross income

1Eligibility — IRA plan participants who participate in an eligible retirement plan at work and meet certain income requirements may receive at least a partial deduction. See your tax advisor for more detailed information.

2Contribution limits under age 50 — For IRAs, contributions are limited to the lesser of the contribution limit or earned income in a given year. The 403(b) and 457(b) governmental plan allow participants to defer 100% of includable compensation — not to exceed the limits indicated in the table above. The coordination of contributions is eliminated between eligible employer plans.

Example: If in 2018 you contribute $18,500 to your 403(b), you can also contribute up to $18,500 to a 457(b) governmental plan.

Example: An educator, age 50 or older, could conceivably contribute $49,000 during 2018 ($18,500 + $6,000 to the 403(b) + $18,500 + $6,000 to the 457(b) = $49,000).

4Final three-year catch-up provision — This provision, for the 457(b) governmental plan, favors participants who haven’t contributed the maximum amount in prior years and are approaching retirement. The provision permits twice the maximum contribution limit and applies to the three years prior to retirement age. If 457(b) governmental plan participants use the “final three-year” provision, they cannot also use the “age 50 catch-up” provision.

Example: An educator planning to retire in 2021 could take advantage of the “final three-year” provision in 2018, 2019 and 2020. Beginning with 2018, the educator could contribute the contribution limit of $18,500 plus the $18,500 three-year provision limit, for a total of $37,000. Then, this individual could also contribute the contribution limit plus the three-year provision limit in 2019 and 2020. As the tables above indicate, the limits for 2019 and after may differ from 2018 depending on inflation.

5The 15-year rule catch-up provision — This provision allows 403(b) plan participants with 15 years or more of service with an employer, and an annual average contribution of $5,000 per year, to contribute an additional $3,000 per year up to a lifetime maximum of $15,000. If an employee qualifies for the 15-year rule, that individual could have elective deferrals to the 403(b) as high as $21,500 for 2018 under this rule ($18,500 plus $3,000 — the catch-up for 15 years of service).

6Early distribution penalties — IRA participants may make penalty-free withdrawals for higher education costs or a first-home purchase ($10,000 maximum for home expenses).

7Required minimum distribution — Roth IRA participants may continue to make contributions to the plan if they are over age 70-1/2 and working.